Insurers are undergoing a review of their payments to brokers, which is likely to lead to a reduction in commissions to the consolidators, Insurance Times understands.
Allianz and AXA are to review commission payments, while RSA is likely to take a ‘wait and see’ approach. Zurich and Aviva say they will not be taking any action.
A source said: “You cannot pay 40/45% commission on SME business and have that for the long term. It was always going to come down by a bit. It was just a question of how much and when.”
The review and likely action will encompass the consolidators – Giles, Oval and Towergate – but also other broker relationships, such as property owners, where commissions are deemed too high.
AXA Commercial Lines chief executive Amanda Blanc said: “I am constantly reviewing the profitability of all key accounts to see whether it works for us or not.”
Allianz Commercial boss Chris Hanks said: “At a time when we are not getting the rate strength that we need, we are looking at other ways in which we keep our costs down and our prices competitive and one of the ways is to review all sorts of outgoings, including commissions.
“I’m much happier paying commission where there is profit than I am where there is lack of certainty of profit.”
Zurich commercial broker manging director Dave Smith said the insurer had always been cautious when it comes to commission payments.
Smith said: “The commissions we have put in place are fairly long term arrangements and we happy that they are sustainable.”
Aviva director of trading Phil Bayles said: “We are broadly happy with the commissions. We took action when we needed to two years ago, so from our perspective, it is steady as it goes.”
Click here to read the full analysis: Times to act on commission payments.
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